Best Ideas of 2010: Dead Aid Reminds Us of Our Mission

Editor’s Note: This post is one in a series on the Best Ideas of 2010 for the BoP. We asked the NextBillion staff writers and editors to share what they considered to be the year’s most impactful – or potentially impactful – concepts, startups or initiatives that came to fruition in 2010.

It should come as no surprise that the Dead Aid prescriptions are market-based, since no economic ideology other than one rooted in the movement of capital and competition has succeeded in getting the greatest numbers of people out of poverty, in the fastest time. -Dambisa Moyo, Dead Aid

Dambisa Moyo’s Dead Aid, which I picked up just before my current trip to South Africa, powerfully and concisely (in only 154 pages) denounces foreign aid to Africa and sums up the core of NextBillion’s philosophy and message-donation-based models are unsustainable, and market-based approaches are more effective in the long-term.

I chose to review this book as a year-end reflection piece because as we move forward to the new year, we must stay rooted at a deep level to the original reason behind our work – why we choose to alleviate poverty and why we choose market-based mechanisms – without getting distracted by everyday difficulties. The source of all progress is inspiration, and as individuals working towards change, it is our responsibility to stay inspired, energized, and passionate about our work.

This book fills that need beautifully. With a strong and articulate voice, Moyo systematically breaks apart the myth that aid is helping Africa, and explains exactly how the aid is actually damaging the continent and preventing economic growth. Born and raised in Zambia, holding a Ph.D. from Oxford and a master’s from Harvard, and with experience working at the World Bank and Goldman Sachs, Moyo has the background, education, and experience to back up her argument.

Since the 1940s, over $1 trillion of aid has been transferred from rich countries to Africa. She argues that this aid has been largely ineffective and harmful, due to corruption, a cycle of aid dependency, and its destruction of local business. Aid also removes pressure to reform inefficient policies and institutions, guaranteeing that in the most aid-dependent regimes, countries remain poor. Not only that, but aid, Moyo explains, “erodes the essential fabric of trust that is needed between people in any functioning society.” It even, she argues, fuels civil wars, since it presents the poor and oppressed with the prospect of seizing access to unlimited aid wealth.

Why does the West continue to pump out millions in aid? Moyo reveals a startling truth: “The donor has a greater need for giving aid than the recipient has for taking it.” In organizations including the World Bank, IMF, UN, government agencies, NGOs and charities, there are hundreds of thousands of people in the business of aid. They are all under enormous pressure to give aid, even to the most corrupt nations where the majority of money will not get passed the country’s leaders. Moreover, she underscores the rampant denial in the development sector, quoting the chief economist at the British Department of Trade and Industry who commented on at least one aid donor: “They know its crap, but it sells the T-shirts.”

Moyo pushes strongly for cutting all aid to Africa, except in emergency situations, and proposes market-based growth mechanisms that have worked wonders in other developing countries, including bonds, foreign direct investment, microfinance, remittances, and savings. She ends the book with an earnest, heartfelt plea: [Cut aid, and] Make the cycle stop.

Dead Aid is direct yet nuanced, breaking down the African aid situation with such razor-sharp logic and clarity that Moyo’s argument is impossible to deny. Now available in paperback, Dead Aid is a must-read as a primer in African development, even if only to revel in and be inspired by Moyo’s powerful prose.